Regal is evaluating project costing

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Reference no: EM131332293

1. Regal Industries has the following capital structure. Its corporate tax rate is 35%.

Security- Book Value- Market Value- Weight- Cost

Debt- $18 million -$20 million ---no weight given------(5%-Cost)

Preferred stock- $10 million- $10 million--no weight given------------ (8.5%-Cost)

Common stock- $37 million- 60 million ---no weight given--------(16%-Cost)

A. Compute WACC = = ………………………….. %

B. Regal is evaluating a project costing $58,000 which will generate $15,000 for 6 years. It will require an increase of $2,000 in NWC at the outset, but no recapture. Should Regal accept the project?

NPV = $ ……………………………… Accept? ……………………….

Reference no: EM131332293

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Regal is evaluating project costing : Regal Industries has the following capital structure. Its corporate tax rate is 35%. Regal is evaluating a project costing $58,000 which will generate $15,000 for 6 years. It will require an increase of $2,000 in NWC at the outset, but no recapture. ..

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